A. Technical Field of the Invention
This invention concerns an electrical computer and a data processing system, and methods involving the same, applied to the financial fields of insurance and mortgages. More particularly, this invention relates to a computer system for preparing, processing and transmitting life insurance premium quotes as part of a mortgage calculation in support of a new financial product. In the new financial product, life insurance is used as collateral and a means for repayment of a mortgage, and facilitates the purchase of real estate without (or with a greatly reduced) down payment. The invention includes automated aspects of the use of premiums paid on life insurance as a substitute for the initial down payment on a mortgage, the use of life insurance policy death benefits to retire the mortgage upon the death of the borrower, the use of accumulated cash values to retire the outstanding principal on a mortgage in the event of the borrower""s survival, and the services of storage and transmission of data for all of the foregoing.
This invention optionally also relates generally to a computerized system for preparing and processing multiple universal life insurance quotes and for preparing and processing universal life insurance applications, based upon those quotes. More particularly, the present invention relates to a machine, manufacture, process, and improvement thereof.
More particularly, this invention relates to a computer system for preparing, processing and transmitting life insurance premium quotes as part of a mortgage calculation in support of a new financial product. In the new financial product, life insurance is used as collateral and a means for repayment of a mortgage, and facilitates the purchase of real estate without (or with a greatly reduced) down payment. The invention includes automated aspects of the use of premiums paid on life insurance as a substitute for the initial down payment on a mortgage, the use of life insurance policy death benefits to retire the mortgage upon the death of the borrower, the use of accumulated cash values to retire the outstanding principal on a mortgage in the event of the borrower""s survival, and the services of storage and transmission of data for all of the foregoing.
B. Description of the Background Art
In the United States, the declining supply of low-cost housing and the inability of many low-income renters to save enough money to make a down payment has forced many potential home buyers out of the housing market, according to a study released Mar. 17, 1988, by the Harvard University Joint Center for Housing Studies. (Reported in the Mar. 28, 1988, Bureau of National Affairs Banking Report.) To address this problem in the United Kingdom, a way has been found to combine life insurance and a mortgage into what is known as an xe2x80x9cendowment mortgage.xe2x80x9d
A UK endowment mortgage is a balloon payment mortgage combined with an endowment life insurance contract. A UK endowment life insurance policy provides life insurance coverage and tax-free accumulation of premium dollars invested in the life insurance policy over a stipulated time periodxe2x80x94usually between twenty and forty years. The lender and the insurance company work in concert to engineer a balloon payment mortgage linked to an endowment life insurance policy so that, at the end of the mortgage period, the cash value accumulated via the life insurance is sufficient to repay the mortgage in a single, lump-sum xe2x80x9cballoonxe2x80x9d repayment.
A home buyer financing the purchase of a home with a UK endowment mortgage pays no principal to the lender over the term of the mortgage. Monthly loan payments are limited to interest only. The mortgage principal is repaid separately by using the life insurance policy. This principal accumulates in an endowment life insurance policyxe2x80x94a universal life insurance policy with a level death benefit equal to the purchase price of the home. The premium dollars invested grow over the term of the mortgage to meet the amount of the principal borrowed to purchase the home. In the last year of the mortgage, the life insurance policy xe2x80x9cendows,xe2x80x9d and the homeowner uses a one-time tax-free distribution from the life insurance policy to repay the mortgage.
The endowment mortgage has numerous advantages to UK borrowers and lenders. First, it is more tax-efficient for borrowers than a conventional amortization mortgage. This is because monthly payments include only interest and are therefore 100 percent tax deductible. Second, principal payments, made in the form of premium payments to the endowment policy (less the cost of mortality and insurance charges), accumulate tax free. This causes endowment policy assets to grow more rapidly, and in turn allows lenders to lower the amount of the required down payment. Third, it is a more secure lending vehicle for the lender. The lender has collateral rights to both the mortgaged property and the insurance policy. Fourth, because of the insurance component of the endowment mortgage, the homeowner has built-in security that so long as he or she maintains the mortgage payments, the survivors will inherit the mortgaged property free of the mortgage.
Subsequent generations of products have expanded on the endowment mortgage concept in the UK. Derivative versions of the product include the so-called Pension Mortgage and Personal Equity Plan (PEP) Mortgage. Both products link the UK equivalent of an Individual Retirement Account or Keough Account, term insurance, and a balloon payment mortgage. These financial products include all of the characteristics of an endowment mortgage (full deductibility of mortgage interest payments, life coverage, and tax-free accumulation of principal). The term insurance provides the life coverage component of the endowment mortgage, the Pension or PEP provides the tax-free accumulation of principal, and the balloon payment mortgage provides fully deductible loan interest. In addition, both the PEP and Pension mortgages have the additional benefit of offering at least a partially deductible principal repayment. Both PEP and Pension contributions are tax-deductible up to certain limits.
Endowment mortgages dominate the residential mortgage market in the UK. For example, approximately 82 percent of all mortgages underwritten in the UK in 1988 were endowment, pension, or PEP type mortgages. Conventional amortization type mortgages, similar to those commonly available in the United States, are also available in the UK, but these accounted for only 18 percent of new mortgage sales in 1988.
Despite their great success in the UK, endowment type mortgages have not similarly dominated the United States residential mortgage market, apparently largely due to the different laws of each nation. In the United States, federal statutes forbid most lenders from selling life insurance. Also, most states have laws forbidding tie-in sales of mortgages. A tie-in sale occurs when a lender insists that a borrower buy a particular insurance product from a particular life insurance company. Legal impediments also exist for life insurers wishing to lend money as an inducement to sell insurance. Further, in the United States the tax treatment of life insurance is different from that in the United Kingdom. In the United States, policyowners must pay taxes on policy distributions in excess of the basis (for US tax purposes, the basis is equal to cumulative premium payments) in the contract. In the UK, distributions from endowment type insurance contracts are tax free.
Thus, in the US there is a unique problem of how to lawfully combine a mortgage and life insurance and additionally make a viable financial product. Accordingly, it is not surprising that computer systems to illustrate such a financial product have been lacking in the United States.
A proposal to combine life insurance and a mortgage, implemented by means of a computer system, has been made in U.S. Pat. No. 4,876,648, titled xe2x80x9cSystem and Method for Implementing and Administrating a Mortgage Planxe2x80x9d (Charles Lloyd) (hereinafter xe2x80x9cLLOYDxe2x80x9d), issued on Oct. 24, 1988. Under LLOYD""s mortgage scheme, as it is presently understood, each year the lender charges some percent over the standard interest rate to cover the cost of insurance premiums ($100,000xc3x971%=$1,000 in LLOYD""s example). These insurance premium payments buy an insurance policy that is owned by the lender as the means by which the mortgage principal is repaid. At five-year intervals, the homeowner may receive a rebate of this extra interest paid (and deducted) by exercising a cost containment clause. At the execution of this clause, the lender makes a distribution equal to the policy premiums to the homeowner. For example, in year 20, the distribution would be equal to $20,000 for a total of 20 annual premiums of $1,000. By exercising the cost containment clause to obtain the $20,000 distribution and using that distribution to buy the life insurance policy from the lender at the lender""s basis in the policy, $20,000, the homeowner can pay down the mortgage. That is, the homeowner now owns an insurance policy with a cash value of $40,648, which may be used to pay down the mortgage.
However, there are a number of significant problems with the LLOYD approach. These problems seem to center on the mechanism for getting the money out of the insurance policy to retire the mortgage, i.e., the cost containment clause. One significant problem that may be real or perceptual is the possibility that the financial product could be viewed as constituting an unlawful discrimination based on age and sex. That is, if the lender builds the cost of the policy premium into the mortgage interest rate, then there will be the appearance of charging different interest rates to different individuals based on their age and sex. Such pricing differences are lawful in a life insurance transaction because these factors relate to the insurance risk. But age and sex discrimination in lending is generally forbidden under the Equal Credit Opportunity Act, 15 U.S.C. xc2xa7 1691(a)(1), which provides that xe2x80x9cIt shall be unlawful for any creditor to discriminate against any applicant with respect to any aspect of a credit transactionxe2x80x94(1) on the basis of race, color, religion, national origin, sex or marital status, or age. . . . xe2x80x9d
It remains undecided whether a court would view the higher interest rate charged as an interest payment, and therefore subject to the regulations regarding equal treatment for all borrowers with the same credit rating, or as an insurance premium. Nonetheless, there may be a perception that there is some risk that whoever attempts to sell the LLOYD financial product would be sued and would lose, and the penalties for unlawful interest rate discrimination are considerable: 15 U.S.C. xc2xa7 1691(e)(a) provides for class action suits; subsection (b) provides for punitive damages; and subsection (c) provides for recovery of attorney fees and costs. In the end, though, the perception of discrimination may be the real Achilles heel of the LLOYD financial product, as the lender would have to offer different rates based on age and sex.
Another drawback of the LLOYD approach is that it has potentially adverse tax consequences. It is unclear if the incremental interest in the LLOYD financial product is tax deductible as home mortgage interest or non-tax deductible as an insurance policy premium payment. That is, if the homeowner has taken a deduction for the incremental interest paid of $1,000 per year over the term of the mortgage, and the cost containment clause is exercised, it is not clear what the tax treatment of the rebate would be. Certainly the IRS will not permit the homeowner to take a deduction for an interest payment for money that is later rebated, and LLOYD acknowledges the possibility of a tax problem with his financial product. See Col. 16, lines 6-20.
For example, in order to buy the policy from the lender at its cost of $20,000, the LLOYD homeowner will have to pay the difference between the cost of the policy and the after-tax proceeds from the interest rebate. This amounts to about $14,000, assuming that the individual is in a 30 percent tax bracket.
Still another drawback to the LLOYD approach is its lack of flexibility. While LLOYD mentions the use of variable and fixed rate mortgages the borrower makes only fixed cost containment clause payments, and there exists no mechanism for adjusting the amount of the payments in the event of declining interest rates. The borrower is therefore financing the repayment of a fixed obligation (i.e., the mortgage) with a variable asset (i.e., an interest-sensitive universal life insurance policy). Thus, in the event of declining interest rates, there is no assurance that the cash value accumulated in the cost containment clause will be sufficient to completely repay the mortgage. Furthermore, if the individual wants to sell the home at any time other than at the precise five-year intervals required by the cost containment clause, he or she will lose the value of the incremental interest payments. It is undoubtedly cumbersome to have to retire the mortgage (i.e., exercise the cost containment clause) xe2x80x9conly during the fifth, tenth, fifteenth, etc., years of the mortgage.xe2x80x9d See LLOYD at Col. 7, line 47-Col. 8, line 6.
Yet another problem with the LLOYD approach is that, under some circumstances, it appears that the lender may end up with either the incremental insurance payments or the insurance policy after the mortgage is retired. For example, if the home buyer missed the 30-day deadline required for the cost containment clause anniversary in year 20, even if the home buyer happens to have $20,000 and buys the policy outright, he or she will receive a policy worth $60,648. But because the home buyer has already invested $20,000 over the previous twenty years, the lender is $20,000 richer, and the homeowner $20,000 poorer, for the exchange.
In addition, there appears to be a potential problem with the approach of LLOYD under circumstances where the mortgage is paid off with cash, such as when the mortgaged property is sold. Assume a $100,000 mortgage is retired with cash at the end of the mortgage term. Under LLOYD, the borrower apparently must pay an additional $30,000 to purchase the insurance policy from the lender.
This is not to say that the financial product proposed in LLOYD is not worthwhile. Rather, LLOYD provides an excellent example of the difficulty in linking a mortgage and an insurance product under the present laws of the United States on a commercially feasible basis.
In sum, then, United States laws (which define a US mortgage) and other obstacles have seemingly prevented a mortgage/insurance type product from being sold. Despite great success of the endowment type mortgage in the United Kingdom, despite billions of dollars lost in bad real estate loans and many collapsed lenders in the United States, despite the creative prowess of the US financial industry which has tried and failed to successfully develop and sell anything resembling a UK endowment type program in the US, the problem remained unsolved: xe2x80x9cfor some renters longing to enter the housing market, the likelihood of coming up with a down payment may seem like a pie-in-the-sky notion.xe2x80x9d (Chicago Tribune, Jan. 24, 1992.) It remained for the present inventors to find a solution.
As a further aspect of the present invention, prior to the present invention, insurance quotes for term life insurance, health insurance, and dental insurance were available from a single computer, but universal life insurance quotes were not known to be available.
Using such single-computer based systems, insurance sellers of annuities, health policies, and term life insurance could request quotes from a large data base of insurance carriers"" products. The computer computes the price of a particular financial product offered by a particular carrier for a given customer of a given age, sex, and health, or insured population profile. Then the computer repeats this operation for a large number of different insurance companies. Comparing the values so calculated for a larger number of different carriers"" insurance products has permitted the computer to automatically identify that product which provides the best value for the consumer. This also permitted the seller to provide the insurance purchaser with the least expensive quote with a minimum of effort.
Companies which have developed and used technology of this kind include Quotesmith, in Palatine, Ill., Group Benefit Shoppers in Boulder, Colorado, Dinan in San Jose, Calif., Select Quote in San Francisco, Calif., and Insurance Information Inc. in Lowell, Mass. Quotesmith, Group Benefit Shoppers and Dinan operate primarily in the group medical field, identifying the best policy for brokers and agents seeking to offer competitive quotes. Quotesmith also uses its technology to provide a similar service to brokers wishing to identify the best term life insurance, single premium deferred annuity, individual medical insurance, and group dental insurance policies. Select Quote offers to find the lowest cost quote for a term life insurance policy, selling insurance to the general public on a discount basis. Insurance Information Inc. offers to find the best term life insurance policy for a fee. See xe2x80x9cNew Firms Offer Computer Listings Of Insurance Prices: Both Have National Ambitions; Both Are Interested in Affiliations with Banks,xe2x80x9d American Banker, Oct. 3, 1985, Pg. 1; xe2x80x9cHere""s how to find cheaper and better health insurance,xe2x80x9d Medical Economics, Mar. 19, 1990, Pg. 109; and xe2x80x9cHealth quoters target agents,xe2x80x9d National Underwriter Property and Casualty Risk-Benefits Management, Aug. 28, 1989, Pg. 9.
While companies have discussed a desire to have the ability to quote homeowners"" insurance, a form of universal life insurance, as early as 1985, as of September 1993, no company or individual has been known to find a way to provide multiple universal life insurance quotes to the public in the United States from a single computer, let alone use that ability to identify the best product.
Instead, insurance agents, insurance brokers, and others representing individuals wishing to purchase universal life insurance policies have been forced to go to many different insurance companies to request quotes. Once received, these universal life insurance quotes have been difficult to compare. Differences in the way these carriers calculate the universal life insurance values have made product comparisons difficult. As a result, insurance sellers have been forced to conduct lengthy and time-consuming analyses to establish which was the best product for the customer. But in view of the aforementioned technological limitations and a fragmented life insurance industry with more than 5,000 carriers; brokers and agents work with only a few carriers. They have not had the ability to search out the best product for their customers. This has become increasingly problematic as product complexity has grown in the universal life insurance industry. Indeed, in some cases unscrupulous agents have taken advantage of increasing complexity in products to further their own unethical ends. In xe2x80x9cInvestigating Agents,xe2x80x9d Best""s Review, September, 1993, pp. 29-30, the authors, Stefan E. Keller and Tony D""Orazio, pointed out, xe2x80x9cThe intricacies of these [life insurance] products require that agents and brokers be more educated than ever to be able to adequately represent the products to consumers. At the same time, the growing complexity increases the probability that products will be represented in an unethical fashion.xe2x80x9d In the absence of a systematic means for computing universal life insurance values and comparing products, a consumer purchasing a universal life insurance policy has little to assure himself or herself that he or she has purchased the best policy.
Once a seller has identified the appropriate product for an individual from one of the thousands of policies available, the process of completing the life insurance carrier""s application forms and obtaining underwriting approval for the product can take weeks or months. Because carriers have different insurance forms, and no system has been designed to accommodate the different policies and their associated forms, even if a consumer, agent, or broker identifies the best policy, he or she might not have the appropriate policy forms on hand to initiate an application. He or she and would have to request these forms by mail and, having received them, complete them manually. Because many different carriers have different ways of assessing their underwriting risks, if the prospective insured is of less than perfect health, the agent or broker may have to request additional illustrations. (An illustration is a projection of estimated policy values over a defined period beginning in the present.) For example, a single xe2x80x9cNoxe2x80x9d response to an underwriting question may trigger a rated policy with higher premiums. Such a policy rating would necessitate a new round of illustrations, starting the whole cycle of illustrations over again.
Given that a system for preparing and processing multiple universal life insurance quotes and for preparing and processing universal life insurance applications would be highly desirable, it would seem obvious that such a system should exist. However, there are several reasons that the aforementioned invention seems to have been elusive heretofore.
The first reason that multiple universal life insurance quotations have not been available from a single computer in the past has to do with, among other things, the mathematics of universal life insurance. Universal life insurance generally involve iteration computations, unlike health insurance, dental insurance, or term life insurance, where a strict linear relationship exists between a given set of insurance parameters (e.g., age, health characteristics, etc.) and the benefit cost. Therefore, product illustrations or projected values for those products require simply looking up the appropriate value in a data base structure based on a given set of product parameters. The best product, given the selection criteria presented, is always the cheapest product. However complicated, complexity of the design for such a system is limited to the requirements of table manipulation. In addition, the universal life insurance policy accumulates cash value. Universal life insurance is therefore a savings vehicle, and any system which produces universal life insurance illustrations must take into account the time value of money. The time value of money is an exponential, non-linear function. The relationships between the cash value accumulated by the policy, its death benefit, and the amount of premium needed to generate them, are also non-linear. They take into account the time value of money and other factors, such as Internal Revenue Service guidelines for the definition of insurance. Therefore, unlike term life insurance, health insurance and annuity products, such a system for illustrating universal life insurance cannot depend on tables of values which can be selected from using a simple set of selection parameters. Heretofore no system has been able to iterate sufficiently efficiently to find the lowest premium from among a large number of different universal life policies using a single, affordable computer.
A second reason that universal life quotes from multiple carriers have not been available from a single computer has to do with how universal life insurance calculations must be manipulated to solve for non-linear values. The best policy in a universal life insurance policy comparison can be determined in several ways other than by calculating the lowest premium. The best policy could also be a policy which remains in force for the longest period of time, given specific assumptions regarding interest rates and the insured person""s longevity. On the other hand, the best policy could be the policy which provides the highest death benefit or cash value accumulation, given an assumed number of level premium payments over a stipulated period. Finally, the best policy could be the policy which provides the highest guaranteed rate of interest in times of low interest rates or the highest policy crediting rates during times of higher interest rates. The complexity of solving for these variables in a non-linear set of equations is an additional impediment to the development of such a system.
A third reason that universal life insurance quotes from multiple carriers have not been available from a single computer has to do with the way in which different life insurance carriers compute universal life insurance policy values. While most universal life policy illustration systems are structurally similar, many different carriers have different ways of computing the various elements of a life insurance policy. These different methods have evolved from actuarial conventions designed to reduce the complexity of computations prior to the age of computing, and, of course, through the process of product differentiation. For example, the way in which annual mortality rates are converted into monthly cost of insurance charges may be computed using a variety of different actuarial assumptions regarding the rate of deaths during the year. Some carriers assume deaths are evenly distributed across all twelve months. Other carriers assume more deaths at the end of the year. Other carriers assume the converse. Similarly, different carriers have different methods for calculating policy administrative expense charges and interest credited.
A fourth reason that universal life insurance quotes from multiple carriers have not been available from a single computer has to do with the way in which insurance is regulated. Each state has legal authority to regulate the way insurance is sold and the kind of insurance that is sold within its boundaries. Therefore, each product sold must be filed with the state insurance commissioner""s office. Each state may require that universal life insurance policies have values that are calculated in different ways. For example, some states may require the use of unisex tables in computing mortality costs even though traditional actuarial principles might dictate otherwise. Other states might require different minimum guarantees in terms of the maximum insurance costs that a carrier may charge. Because in the United States an insurance quote system must be able to provide insurance quotes in more than one state in order to justify the cost of development, such state by state differences (added to the aforementioned product by product differences) increase the difficulty of developing a system for finding the best universal life insurance quote from a single computer.
Therefore it is an object of the present invention to provide a computerized investment and mortgage payment calculation system which overcomes the previously mentioned disadvantages and limitations of the prior art.
A further object of this invention is to provide a computerized investment and mortgage illustration system, and a method of operating that system, in which a standardized illustration request form is filled out electronically for the purposes of providing a mortgage quote and an investment quote, and a means for computing mortgage and investment payments in conformity with those quotes.
An additional object of this invention is to provide a computerized investment and mortgage illustration system which uses a central computer to provide information concerning a mortgage using an investment as collateral and as a means for repaying the mortgage.
Another object of this invention is to provide a computer system for producing a printed illustration document which will permit comparison of the innovative financial product with other loan products.
Yet another object of this invention is to provide a computer system incorporating a central database into which data representing different lenders"" mortgage rates is written and from which data is read in order to provide an illustration of a mortgage collateralized by an investment which is most suitable to the borrower""s needs.
Still another object of this invention is to provide a computer system incorporating a central database into which data regarding different carriers"" life insurance policies is written and verified by each such carrier authorized for retrieval thereof and from which is read data making up an illustration proposal of a mortgage backed by a life insurance policy which is most suitable to the borrower""s needs given underwriting and policy requirements.
Still another object of the invention is to provide a computer system incorporating a central database accessible via modem capable of storing and transmitting locally applicable mortgage and insurance quotes on a national basis.
Still another object of this invention is to provide a computerized insurance and mortgage illustration system capable of showing the projected annual accumulation of life insurance cash values that (under current interest and mortality charge assumptions under a given life insurance carrier""s life contract and authorized projections thereof) will provide collateral for a mortgage and which will eventually pay off that mortgage with the after-tax proceeds from surrendering the insurance policy after a stipulated period.
Still another object of this invention is to provide a computerized insurance and mortgage illustration system capable of showing the projected annual accumulation of life insurance cash values that (under current interest and mortality charge assumptions under a given life insurance carrier""s life contract and authorized projections thereof) will provide collateral for a mortgage and which will eventually pay off that mortgage with the proceeds from a life insurance policy loan after a stipulated period.
Still another object of this invention is to provide a computerized insurance and mortgage illustration system capable of showing the projected annual accumulation of life insurance cash values that (under current interest and mortality charge assumptions under a given life insurance carrier""s life contract and authorized projections thereof) will provide collateral for a mortgage and which will eventually pay off that mortgage with the proceeds from life insurance policy death benefits.
Still another object of this invention is to provide a computerized insurance and mortgage illustration system capable of showing the projected annual accumulation of life insurance cash values that (under current interest and mortality charge assumptions under a given life insurance carrier""s life contract and authorized projections thereof) will provide collateral for a mortgage and which will eventually pay the interest on that mortgage with the proceeds from life insurance policy loans after a stipulated period.
Still another object of this invention is to provide a computerized insurance and mortgage illustration system capable of showing the annual death benefit amount which will provide for the payment of the remaining principal owed in each year over the stipulated term of the mortgage.
Still another object of this invention is to provide a computerized insurance system capable of identifying potentially higher risk individuals and providing specialized insurance values for those individuals in an illustration of a mortgage using life insurance cash values as collateral.
Still another object of this invention is to provide a computerized insurance and mortgage illustration system incorporating a central database into which data is written and from which such data is read, to provide the prospective applicant with finally printed, individualized, loan and insurance application forms prepared from standardized textual material in combination with the aforementioned information.
It is also an object of the present invention to provide a machine, manufacture, process, and improvement thereof in which an electrical signal processing system processes and modifies electrical signals representing data so as to overcome the aforementioned disadvantages of prior art systems and construct and manipulate multiple universal life insurance quotes by electrical engineering means.
Another object of this invention is to provide a machine, manufacture, process, and improvement thereof in which a computerized system is capable of using iteration to efficiently arrive at the correct amount of a universal life insurance policy premium and, indeed, amounts for other universal life insurance policies as well.
Yet another object of the invention is to provide a machine, manufacture, process, and improvement thereof in which a computerized system is capable of comparing multiple universal life insurance quotes in order to identify the policy which best fits a given consumer""s needs as defined, for example, by the lowest premium, highest cash value, highest policy death benefit, or longest in-force policy life.
Yet another object of the invention is to provide a machine, manufacture, process, and improvement thereof in which a computerized system is capable of taking into account a large number of different actuarial methods for computing universal life insurance policy values.
Yet another object of the invention is to provide a machine, manufacture, process, and improvement thereof in which a computerized system is capable of accommodating different universal life insurance values from different states.
Yet another object of the invention is to provide a machine, manufacture, process, and improvement thereof in which a computerized system is adapted for preparing and processing universal life insurance quotes from many policies based on underwriting information obtained in a single set of questions common to all carriers.
Yet another object of the invention is to provide a machine, manufacture, process, and improvement thereof in which a computerized system in which different carriers"" universal life insurance application forms are available electronically, and may be completed electronically for the purpose of producing both paper and electronic applications to be sent to a carrier.
Other objects and advantages of the present invention will become apparent from the following summary of the invention, drawings, and detailed description of the invention and its preferred embodiment.
Various other objects, advantages and features of the present invention will become readily apparent from the ensuing detailed description, and the novel features will be particularly pointed out in the appended claims.
In accordance with the broad, general objects of this invention, particularly as regards the mortgage aspect of the present invention, a computerized investment and mortgage illustration system is provided for use in illustrating and supporting an innovative financial product. The innovation involves a financial product using an investment other than a down payment (such as cash value life insurance) as collateral and a repayment means for a mortgage, preferably wherein the financial product is devoid of a cost containment clause. This can be accomplished, for example, by having the borrower own an insurance policy and use the policy to secure the loan. In one embodiment (to which the present invention is not limited), a party other than the lender or insurer can illustrate a combination of life insurance and a mortgage preferably selected from those of numerous lenders and insurers.
Accordingly, the present invention involves processing information in a standardized manner, preferably to package an individually selected mortgage product with an individually selected investment product, the products each being selected from respective groups of such products made available by different suppliers. The packaging process tailors the financial product to the prospective applicant""s particular needs.
The system can, for example, be owned and operated by a suitably licensed national intermediary, for example, a broker or data processing company. The intermediary would work in conjunction with lenders, securities firms and life insurance companies (and their agents and representatives) and with mortgage brokers to design, develop, and distribute investment and mortgage products. The investment and mortgage products, when used in combination with one another, will provide mortgages using an investment as supplemental collateral acceptable to lenders, mortgage insurers and endorsers, and investors in the secondary market for mortgages. The intermediary, operating nationally in cooperation with lenders and utilizing the system provided by this invention, can facilitate the sale of the combined investment/mortgage products by providing authorized lawyers, real estate agents, accountants, financial consultants, relocation specialists, corporate benefits advisors, or mortgage and/or life insurance agents and securities brokers with access to the system of this invention via remote terminals. As compensation for its work in designing the products, maintaining the system, and administering new kinds of supplemental collateral made possible by the system, the intermediary and user of the system would receive commissions for the sale of investments or, when appropriate, would receive fees for services provided.
Having a data processor or broker working in conjunction with lenders differs from past intermediaries both in the United States and the United Kingdom in that the system of this invention creates for the first time the capability of offering a number of different investment and mortgage products which may be used in conjunction with one another. By bringing these disparate products together in a combined format that is understandable to the end customer, the system permits the customer to have the benefit of access to a new composite mortgage instrument with supplemental security which would otherwise not be available, without encountering the aforementioned problems of the prior art.
A user of the system can be an employee of the aforementioned intermediary providing illustrations requested by individuals outside of that firm. Alternatively, a user of the system can be an individual who has received special approval from the intermediary to use the system.
A central processing unit in a digital computer is at the heart of the system. The central processing unit can access a database into which data is written and from which data is read. That data includes information regarding life insurance, mortgage information, actuarial information, insurance premium information, and predetermined text data for incorporation into the combined mortgage and insurance illustrations. The computer system further includes information corresponding to requirements of laws and regulations governing insurance and information on personal tax rates.
Plural terminals are provided for communicating with the central processing unit, each terminal having input means, such as a keyboard, and a display, such as a cathode ray tube (CRT) or a video display terminal (VDT). Each terminal is operable by a user to produce requests and to enter information and/or retrieve information for writing into and/or reading from the database via the central processing unit. The central processing unit provides a means for enabling access to the database in response to predetermined information entered at the terminal by the user and is suitably programmed to recognize particular authorizations.
In accordance with one desirable aspect of the invention, information regarding a life to be insured and other data needed to provide illustrations of a mortgage using life insurance as collateral for that individual is keyed into the central processing unit by a system user using a keyboard at a video display terminal. To assist the user in entering the appropriate data, a series of data comprising a xe2x80x9cformxe2x80x9d is displayed on the user""s terminal by the central processing unit, and the user will normally proceed to enter pertinent information in the blanks provided. This information constitutes such things as the potential borrower""s name and address, the amount of the mortgage requested, the amount of life insurance coverage required, the individual""s personal tax rate, the number of points required by the lending institution, the individual""s age, sex, and health status, and any other information necessary in providing an illustration of a mortgage using life insurance as collateral. This information is correlated via the central processing unit, resulting in the generation of premium quotation and mortgage illustration information. This information is then displayed at the user""s terminal and can be printed out on the user""s printer. Thus, in a matter of minutes, a prospective applicant is apprised of information pertinent to the mortgage such as (but not limited to) what the up-front payment and monthly payments would be for the mortgage if life insurance is used as collateral.
Once data called for by the xe2x80x9cformxe2x80x9d is entered into the computer system at the user""s keyboard, a client information file or database record (hereinafter xe2x80x9cclient filexe2x80x9d) is established which will be variously updated as the user conducts sensitivity analyses of the impact of different insurance and loan related assumptions on the ultimate amount of the up-front payment and the mortgage. Once the prospective applicant decides to apply for a life insurance policy and loan, a final version of the illustration is saved by the user in a master database file for later retrieval and processing.
After input data has been compiled in a client file, errors or omissions in that data (e.g., the amount of requested insurance may be too high or omitted altogether, etc.) are detected. If these errors cannot be corrected immediately (for example, by supplying information from another file or record), further processing of the illustration request is suspended and the need for additional information is reported.
In the event that the prospective applicant wishes to proceed immediately to obtain the respective applications for the insurance and mortgage products, the system is capable of taking the information stored in a final illustration database file, requesting a minimum of information otherwise not required in the illustration process (such as the prospective applicant""s personal balance sheet information, which typically is required in the loan application form) and merging it with prepared textual information about the insurance and loan products to generate printed application documents in a form acceptable to, and previously approved by, the lender and the insurance company. The system also permits the user to separately enter these forms and fill the forms out electronically. The application forms still require signature by the prospective applicant, however. When signed, these forms are sent, for example, by mail or courier, to the lending institution and the system owner/operator for further processing. Should the prospective applicant wish to have this process expedited, the user may send the information on the signed forms electronically to a computer at the lending institution and/or system owner/operator, facilitating processing in advance of the receipt of the signed paper copies.
An alternative method for entering client data into the system, rather than by entering this data directly at a user""s terminal, is to have the prospective applicant manually complete insurance and loan illustration request forms which may or may not have been generated at the user""s terminal. The request form can be sent by mail or courier to the system operator and entered by the user into the computer system.
By means of the aforementioned computer system, this invention makes it possible for the first time to offer the American consumer a US mortgage arrangement which will perform like the endowment mortgage available in the United Kingdom. This mortgage/insurance financial product (referenced herein as the xe2x80x9cRyan Mortgagexe2x80x9d) has innovative characteristics uniquely suited to the US legal environment, but without the drawbacks of LLOYD. Unlike LLOYD, the Ryan Mortgage is typically not a single financial product necessarily offered by a single seller (e.g., a lender). In a preferred embodiment, it is a combination of two or more different financial products offered by different suppliers (i.e., multiple lenders and multiple insurance carriers). Because the consumer, not the lender, is the owner of the life insurance policy, there is no cost containment clause in the Ryan Mortgage.
Also, the borrower owns the means for repaying the mortgage; the borrower may completely repay the mortgage without having to purchase the means for repaying the mortgage from the lender. Like the UK product, the key components to the transaction may include: a balloon repayment mortgage, life insurance coverage equal to the amount of the mortgage, and a separate vehicle for accumulating principal. Vehicles for accumulating principal might include a universal life insurance contract, an Individual Retirement Account, Keough Account, or zero coupon bond.
This description will focus on a preferred embodiment of the invention using as an investment a universal life insurance policy, but it is to be explicitly understood that other equivalent investments can be used as a means for repaying the mortgage, e.g., term life insurance with a zero coupon bond, IRA, Keough Account, or tax-deferred annuity, or some other (preferably tax-favored) means for producing secured revenue in conjunction with life insurance. Indeed, in another embodiment of the present invention, an investment for repaying the mortgage can be selected from any two or three of a group consisting of a life insurance policy, a security, and an annuity. Further, the mortgage repayment vehicle can comprise a plurality of these investments selected from the group.
As in the UK, a purchaser of a Ryan Mortgage will enjoy fully deductible mortgage interest payments over the life of the mortgage. Premium payments provide life insurance coverage, and tax-free growth of principal for the repayment of the mortgage.
Unlike the UK product or a conventional US mortgage, the Ryan Mortgage completely or partially replaces the traditional mortgage down payment with an insurance purchase. For example, to purchase a $262,000 home rather than pay $52,400 (20% of the home purchase price) as a down payment and borrow the remaining $209,600, the Ryan Mortgage home buyer pays $31,586 (12% of the home purchase price) to purchase a life insurance contract and borrows $262,000, the full purchase price of the home. The $31,586 life insurance investment provides paid up coverage for the remainder of the borrower""s life. The policy also accumulates sufficient cash value to repay the $262,000 balloon payment mortgage loan when it comes due, for example, in thirty years. The borrower pays only monthly interest charges on the mortgage. Monthly mortgage payments do not include principal repayment. Monthly mortgage payments are one hundred percent tax deductible over the life of the mortgage. (See Specimen 2.)
Normally lenders are reluctant to provide financing for one hundred percent of the purchase price of a home and are unwilling to wait until the end of the mortgage for the repayment of principal. However, under the Ryan Mortgage, the lender has additional security: the real estate plus the insurance.
The Ryan Mortgage offers the borrower at least two premium payment methods. The first is a lump-sum prepayment. With a lump-sum prepayment, the home buyer deposits an amount sufficient to pay the first scheduled premium. He or she also deposits enough money to purchase an annuity contract that will pay three annual premium payments (for example) for the second through fourth years of the life insurance contract. For example, of the $31,586 payment described above, $8,916.16 would go to pay the first scheduled premium payment and $22,669.84 would go to purchase an annuity at the date of the mortgage closing. Over the next three years, the annuity will make the premium payment of $8,916.16 on the anniversary of the mortgage transaction. After making his or her lump-sum payment, the home buyer normally makes no further premium payments. While interest rates remain at or above the rate projected, these premium payments will be sufficient to ensure that the life insurance contract remains in force over the life of the mortgage. The premium is also large enough to assure that the policy will accumulate sufficient cash value to repay the mortgage by the end of the mortgage term. Normally, the lump-sum prepayment needed will be less than twenty percent of the purchase price of the home. (The standard down payment amount of a conventional home purchase is twenty percent of the purchase price.) Also, the after-tax monthly cost of the all-interest monthly mortgage payments will typically be less than or equal to the cost of a conventional mortgage with a similar down payment amount.
The second premium payment method involves the participation of a guarantor. A guarantor could be an employer wishing to provide a benefit for its employees to relocate for business purposes. Also, a guarantor could be a lender providing an irrevocable letter of credit in exchange for a fee. The guarantor provides financial assurances to the lender that the home buyer will make the annual insurance payments. In a guaranteed transaction, the homeowner""s premium payment would usually be less than five percent of the purchase price of the home. For example, ten annual premium payments of $4,700.70 could provide adequate cash value to pay off the $262,000 mortgage obligation in the last year of the mortgage. A guarantor arrangement allows the home buyer to make a drastically reduced up-front payment. In this example, the first of ten annual premium payments, $4,700.70, amounts to 1.79% of the $262,000 home purchase price. However, the transaction will require the home buyer to make, for example, nine additional premium payments in upcoming years. These insurance payments are divided into monthly payments and paid into an escrow account. Thus, in the first years, the monthly cost to the prospective applicant will include these amounts which may inflate the Ryan Mortgage cost versus the conventional mortgage. Since the insurance premiums are typically lower for younger individuals, the Ryan Mortgage will be most attractive to that kind of person. Younger individuals, such as first time home buyers, are also the ones most likely to need the smallest possible up-front payment. (See Specimen 5 for sample system output.)
Under both premium payment plans, the borrower makes a collateral assignment of the policy to the lender or a third party endorser of the mortgage, such as a federal mortgage endorsement agency or a private mortgage insurance company. Under the terms of the collateral assignment agreement, the assignee has claim to the life insurance contract until the borrower repays the mortgage. When the borrower repays the mortgage, title to the home and the insurance policy vest in the borrower. If the borrower dies before the end of the mortgage term, the borrower""s estate receives tax-free life insurance death benefit proceeds after deduction of the amount required to repay the mortgage obligation.
Should the home be sold for an amount which permits the mortgage to be paid out of the proceeds, the borrower will retain ownership of the life insurance contract. Such a life insurance policy has many uses. For example, the policyholder may use the policy as supplemental collateral for another mortgage and to replace the down payment in a subsequent home purchase and mortgage transaction.
Alternatively, the homeowner may not want to enter another Ryan Mortgage transaction. If so, he or she can keep the policy and take advantage of the many other benefits of a permanent life insurance policy. A policyholder may use the life insurance policy as a savings vehicle, a source of additional life insurance coverage, a source of cash for other obligations, or a means of financing retirement benefits. For example, the policyholder may pay additional premiums and enjoy tax-free accumulation of the invested principal. The policyholder may elect to reduce his or her coverage and withdraw cash from the policy via partial withdrawals or policy loans. Policy distributions can be used to pay for major expenses such as a new car, a medical emergency, or college tuition payments for children. If the policyholder no longer needs life insurance coverage, the policyholder can enter into a tax-free exchange of the life insurance policy. For example, the policyholder can exchange the life insurance policy for an annuity that provides monthly income in retirement.
The Ryan Mortgage has other unique features designed to maximize benefit to the consumer and minimize the after-tax cost of financing the mortgage. The homeowner may repay the mortgage in one of at least three ways at the end of the mortgage term. First, the homeowner may surrender the life insurance contract and use the proceeds of the policy surrender to pay off the mortgage. Under US tax law, presently, the policyholder must pay taxes on the interest income accumulated over the basis in the contract in the event of policy surrender. However, the policyholder will have had the benefit of tax-deferred accumulation of interest on the principal for up to forty years. Normally, cash value accumulated by the end of the mortgage will be sufficient to both repay the mortgage and pay the taxes on interest earnings.
Second, the homeowner may use a policy loan to pay off the mortgage. Life insurance contracts typically permit policyholders to borrow against the cash value of the life insurance policy. A policy loan differs from a mortgage or other loan from a lender in that the policy loan is non-recourse debt. The insurance company, in issuing the policy loan, has recourse only to the life insurance policy cash value. Under some policy loan provisions, as long as the policy cash value exceeds the policy loan balance, the policyholder need never pay interest on the loan, or repay the policy loan balance. When the policyholder dies, the policy loan is deducted from the policy death benefit and the insurance company will pay the net death benefit remaining to the policyholder""s estate.
The advantage of a policy loan over a policy surrender has to do with the income tax effects of the two transactions. Proceeds from policy surrenders which are in excess of the basis (premiums) represent taxable income to the policyholder. On the other hand, policy loans are not taxable income to the recipient. Therefore, by using a policy loan to repay the mortgage, the homeowner can simply hold the policy until death. Using this method, the policyholder never has to pay taxes on the accumulated interest earned in the life insurance contract.
A third option may be available to the homeowner with a good credit record during the life of the mortgage. The homeowner may roll over the mortgage in the last year and hold it until death. By using life insurance policy loans at the beginning of each year to pay the annual mortgage interest, the policyholder keeps more money in the life insurance contract and maintains a higher death benefit than if the money had been used to pay off the mortgage immediately. This approach also allows the homeowner to maintain tax-deductible mortgage interest payments in retirement.
Further, as regards the insurance component of the present invention, and in accordance with the broad, general objects of this invention, a digital signal processing system processes and modifies electrical signals representing data to construct multiple universal life insurance quotes. Accordingly, the present invention involves processing information in a standardized manner, preferably to offer an individually selected universal life insurance product, the product being selected from a group of such products made available by different suppliers.
The system can, for example, be owned and operated by a suitably licensed national intermediary, for example, a broker or data processing company. The intermediary would work in conjunction with life insurance companies (and their agents and representatives) to design, develop, and distribute universal life insurance policies. The intermediary, operating nationally in cooperation with life insurance companies and utilizing the system provided by this invention, can facilitate the sale of the universal life insurance by agents accessing the system of this invention via remote terminals.
A user of the system can be an employee of the aforementioned intermediary providing illustrations requested by individuals outside of that firm. Alternatively, a user of the system can be an individual who has received special approval from the intermediary to use the system. (In a simplified version of the product, it is anticipated that an authorized user might even include a member of the general public, in states where the direct sale of insurance via computer is permitted.) A central processing unit in an electrical digital computer is at the heart of the system. The central processing unit can access a database into which data is written and from which data is read. That data includes information regarding life insurance, actuarial information, insurance premium information, and predetermined text data for incorporation into the insurance illustrations. The computer system further includes information corresponding to requirements of laws and regulations governing insurance.
At least one, preferably multiple terminals are provided for communicating with the central processing unit, each terminal having input means, such as a keyboard, and a display, such as a cathode ray tube (CRT) or a video display terminal (VDT). Each terminal is operable by a user to produce requests and to enter information and/or retrieve information for writing into and/or reading from the database via the central processing unit. The central processing unit provides a means for enabling access to the database in response to predetermined information entered at the terminal by the user and is suitably programmed to recognize particular authorized users.
In accordance with one desirable aspect of the invention, information regarding a life to be insured and other data needed to provide an illustration of a universal life insurance policy for that individual is keyed into the computer system user using a keyboard at a video display terminal. To assist the user in entering the appropriate data, a series of data comprising a xe2x80x9cformxe2x80x9d is displayed on the user""s terminal by the central processing unit, and the user will normally proceed to enter pertinent information in the blanks provided. This information constitutes such things as the potential insured""s name and address, the amount of the mortgage requested, the amount of life insurance coverage required, the individual""s age, sex, and health status, and any other information necessary in providing an illustration of a universal life insurance policy. This information is correlated via the central processing unit, resulting in the signal processing generation of premium quotation. This information is then displayed at the user""s terminal and can be printed out on the user""s printer. Thus, a prospective applicant is quickly apprised of information pertinent to the policy such as (but not limited to) what the premium payment would be.
Once data called for by the xe2x80x9cformxe2x80x9d is entered into the computer system at the user""s keyboard, a client information file or database record (hereinafter xe2x80x9cclient filexe2x80x9d) is established which will be variously updated as the user conducts sensitivity analyses of the impact of different insurance-related assumptions on the ultimate amount of the premium payment. Once the prospective applicant decides to apply for a life insurance policy, a final version of the illustration is saved by the user in a master database file for later retrieval and processing.
After input data has been compiled in a client file, errors or omissions in that data (e.g., the amount of requested insurance may be too high, etc.) are detected. If these errors cannot be corrected immediately (for example, by supplying information from another file or record), further processing of the illustration request is suspended and the need for additional information is reported.
In the event that the prospective applicant wishes to proceed immediately to obtain the application for the insurance, the system is capable of taking the information stored in a final illustration database file, requesting a minimum of information otherwise not required in the illustration process (such as additional health information not taken in the initial illustration process) and merging it with prepared textual information about the insurance policy to generate printed application documents in a form acceptable to, and previously approved by, the insurance company. The system also permits the user to separately fill the forms out electronically. The application forms still can require signature by the prospective applicant, however. When signed, these forms are sent, for example, by mail or courier, to the system owner/operator (or carrier) for further processing. Should the prospective applicant wish to have this process expedited, the user may send the information on the signed forms electronically to a computer at the carrier, facilitating processing in advance of the receipt of the signed paper copies.
An alternative method for entering client data into the system, rather than by entering this data directly at a user""s terminal, is to have the prospective applicant manually complete insurance illustration request forms which may or may not have been generated at the user""s terminal. The request form can be sent by mail or courier to the system operator and entered by the user into the computer system.
By means of the aforementioned computer system, this invention makes it possible for the first time to offer the American consumer a universal life insurance policy which is verifiably the best policy to suit his or her needs. The need for such a capability is well documented: xe2x80x9cThere can hardly be a banker left in the United States who doesn""t know that the insurance distribution system is costly, inefficient, and vulnerable to attack. There are more than 5,000 insurance companies in the United States, their products are sold one-on-one, andxe2x80x94although most of these products are commoditiesxe2x80x94their prices vary by hundreds of dollars,xe2x80x9d American Banker, Oct. 3, 1985, Pg. 1. While many have discussed creating such a system, it was left to the present inventor to conceive of a way to make the present invention.
The following description, given by way of example and not intended to limit the present invention solely to the described embodiments, will be best understood in conjunction with the accompanying drawings, the computer or xe2x80x9cuserxe2x80x9d screens, and specimens incorporated herein.
A. Figures
FIG. 1 is a schematic representation of the computerized insurance and mortgage illustration system of the present invention.
FIG. 2 represents a schematic flow chart of the logic behind the xe2x80x9cmain menuxe2x80x9d (or user screen with a list of the functional choices that the computerized system provides to users) of the present invention.
FIG. 3 depicts the logic behind the illustration function of the present invention.
FIG. 3A-1 represents a schematic flow chart of the logic used in making standardized or xe2x80x9cgenericxe2x80x9d illustrations designed to provide potential purchasers with examples of how the life insurance and mortgage combination might perform, according to the present invention.
FIGS. 3B-1-3B-8 provide a flow chart of the logic used in calculating and printing an individualized or xe2x80x9cnewxe2x80x9d prospective applicant illustration tailored to the individual, and in creating a corresponding new prospective applicant data file, in accordance with the present invention.
FIG. 3C-1 provides a flow chart of the logic used in changing or updating an existing client data file for the purpose of providing the prospective applicant new illustrations based on assumptions which differ from those originally illustrated, in accordance with the present invention.
FIG. 3D-1 represents a flow chart of the logic used in electronically completing and/or printing a life insurance application form and storing the information contained on the insurance application form in a database of the host computer for later retrieval, in accordance with the present invention.
FIG. 3E-1 represents a flow chart of the logic used in electronically completing and/or printing a mortgage loan application form and storing the information contained on the mortgage loan application form in a database of the host computer for later retrieval, in accordance with the present invention.
FIG. 3F-1 represents a flow chart of the logic used to access the host computer for, and/or print out information regarding, new insurance product developments.
FIG. 3G-1 represents a flow chart of the logic used to access the host computer for, and/or print out information regarding, current loan rates and other mortgage-product related information.
FIGS. 3H-1-3H-2 provide a flow chart of the logic used in recalculating a homeowner""s mortgage and premium payments in a given year after the mortgage transaction has been completed.
FIGS. 4-35C are schematic representations of the relationships between various data entities (database tables) within the database system of the present invention.
FIG. 5 is a representation of a computer user screen, User Screen 1, in accordance with the present invention.
FIG. 6 is a representation of a computer user screen, Screen 2 in accordance with the present invention.
FIG. 7 is a representation of a computer user screen, Screen 3 in accordance with the present invention.
FIG. 8 is a representation of a computer user screen, Screen 4 in accordance with the present invention.
FIG. 9 is a representation of a computer user screen, Screen 5 in accordance with the present invention.
FIG. 10 is a representation of a computer user screen, Screen 6 in accordance with the present invention.
FIG. 11 is a representation of a computer user screen, Screen 7 in accordance with the present invention.
FIG. 12 is a representation of a computer user screen, Screen 8 in accordance with the present invention.
FIG. 13 is a representation of a computer user screen, Screen 9 in accordance with the present invention.
FIG. 14 is a representation of a computer user screen, Screen 10 in accordance with the present invention.
FIG. 15 is a representation of a computer user screen, Screen 11 in accordance with the present invention.
FIG. 16 is a representation of a computer user screen, Screen 12 in accordance with the present invention.
FIG. 17 is a representation of a computer user screen, Screen 13 in accordance with the present invention.
FIG. 18 is a representation of a computer user screen, Screen 14 in accordance with the present invention.
FIG. 19 is a representation of a computer user screen, Screen 15 in accordance with the present invention.
FIG. 20 is a representation of a computer user screen, Screen 16 in accordance with the present invention.
FIG. 21 is a representation of a computer user screen, Screen 17 in accordance with the present invention.
FIG. 22 is a representation of a computer user screen, Screen 18 in accordance with the present invention.
FIG. 23 is a representation of a computer user screen, Screen 19 in accordance with the present invention.
FIG. 24 is a representation of a computer user screen, Screen 20 in accordance with the present invention.
FIG. 25 is a representation of a computer user screen, Screen 21 in accordance with the present invention.
FIG. 26 is a representation of a computer user screen, Screen 22 in accordance with the present invention.
FIG. 27A, which continues through FIG. 27E, represents a portion of an example of a printed specimen, Specimen 1, in accordance with the present invention.
FIG. 27B is a continuation from FIG. 27A and represents a portion of an example of a printed specimen, Specimen 1, in accordance with the present invention.
FIG. 27C is a continuation from FIG. 27A and represents a portion of an example of a printed specimen, Specimen 1, in accordance with the present invention.
FIG. 27D is a continuation from FIG. 27A and represents a portion of an example of a printed specimen, Specimen 1, in accordance with the present invention.
FIG. 27E is a continuation from FIG. 27A and represents a portion of an example of a printed specimen, Specimen 1, in accordance with the present invention.
FIG. 28A, which continues through FIG. 28J, represents a portion of an example of a printed specimen, Specimen 2, in accordance with the present invention.
FIG. 28B is a continuation from FIG. 28A and represents a portion of an example of a printed specimen, Specimen 2, in accordance with the present invention.
FIG. 28C is a continuation from FIG. 28A and represents a portion of an example of a printed specimen, Specimen 2, in accordance with the present invention.
FIG. 28D is a continuation from FIG. 28A and represents a portion of an example of a printed specimen, Specimen 2, in accordance with the present invention.
FIG. 28E is a continuation from FIG. 28A and represents a portion of an example of a printed specimen, Specimen 2, in accordance with the present invention.
FIG. 28F is a continuation from FIG. 28A and represents a portion of an example of a printed specimen, Specimen 2, in accordance with the present invention.
FIG. 28G is a continuation from FIG. 28A and represents a portion of an example of a printed specimen, Specimen 2, in accordance with the present invention.
FIG. 28H is a continuation from FIG. 28A and represents a portion of an example of a printed specimen, Specimen 2, in accordance with the present invention.
FIG. 28I is a continuation from FIG. 28A and represents a portion of an example of a printed specimen, Specimen 2, in accordance with the present invention.
FIG. 28J is a continuation from FIG. 28A and represents a portion of an example of a printed specimen, Specimen 2, in accordance with the present invention.
FIG. 29A, which continues through FIG. 29L, represents a portion of an example of a printed specimen, Specimen 3, in accordance with the present invention.
FIG. 29B is a continuation from FIG. 29A and represents a portion of an example of a printed specimen, Specimen 3, in accordance with the present invention.
FIG. 29C is a continuation from FIG. 29A and represents a portion of an example of a printed specimen, Specimen 3, in accordance with the present invention.
FIG. 29D is a continuation from FIG. 29A and represents a portion of an example of a printed specimen, Specimen 3, in accordance with the present invention.
FIG. 29E is a continuation from FIG. 29A and represents a portion of an example of a printed specimen, Specimen 3, in accordance with the present invention.
FIG. 29F is a continuation from FIG. 29A and represents a portion of an example of a printed specimen, Specimen 3, in accordance with the present invention.
FIG. 29G is a continuation from FIG. 29A and represents a portion of an example of a printed specimen, Specimen 3, in accordance with the present invention.
FIG. 29H is a continuation from FIG. 29A and represents a portion of an example of a printed specimen, Specimen 3, in accordance with the present invention.
FIG. 29I is a continuation from FIG. 29A and represents a portion of an example of a printed specimen, Specimen 3, in accordance with the present invention.
FIG. 29J is a continuation from FIG. 29A and represents a portion of an example of a printed specimen, Specimen 3, in accordance with the present invention.
FIG. 29K is a continuation from FIG. 29A and represents a portion of an example of a printed specimen, Specimen 3, in accordance with the present invention.
FIG. 29L is a continuation from FIG. 29A and represents a portion of an example of a printed specimen, Specimen 3, in accordance with the present invention.
FIG. 30A, which continues through FIG. 30L, represents a portion of an example of a printed specimen, Specimen 4, in accordance with the present invention.
FIG. 30B is a continuation from FIG. 30A and represents a portion of an example of a printed specimen, Specimen 4, in accordance with the present invention.
FIG. 30C is a continuation from FIG. 30A and represents a portion of an example of a printed specimen, Specimen 4, in accordance with the present invention.
FIG. 30D is a continuation from FIG. 30A and represents a portion of an example of a printed specimen, Specimen 4, in accordance with the present invention.
FIG. 30E is a continuation from FIG. 30A and represents a portion of an example of a printed specimen, Specimen 4, in accordance with the present invention.
FIG. 30F is a continuation from FIG. 30A and represents a portion of an example of a printed specimen, Specimen 4, in accordance with the present invention.
FIG. 30G is a continuation from FIG. 30A and represents a portion of an example of a printed specimen, Specimen 4, in accordance with the present invention.
FIG. 30H is a continuation from FIG. 30A and represents a portion of an example of a printed specimen, Specimen 4, in accordance with the present invention.
FIG. 30I is a continuation from FIG. 30A and represents a portion of an example of a printed specimen, Specimen 4, in accordance with the present invention.
FIG. 30J is a continuation from FIG. 30A and represents a portion of an example of a printed specimen, Specimen 4, in accordance with the present invention.
FIG. 30K is a continuation from FIG. 30A and represents a portion of an example of a printed specimen, Specimen 4, in accordance with the present invention.
FIG. 30L is a continuation from FIG. 30A and represents a portion of an example of a printed specimen, Specimen 4, in accordance with the present invention.
FIG. 31A, which continues through FIG. 31J, represents a portion of an example of a printed specimen, Specimen 5, in accordance with the present invention.
FIG. 31B is a continuation from FIG. 31A and represents a portion of an example of a printed specimen, Specimen 5, in accordance with the present invention.
FIG. 31C is a continuation from FIG. 31A and represents a portion of an example of a printed specimen, Specimen 5, in accordance with the present invention.
FIG. 31D is a continuation from FIG. 31A and represents a portion of an example of a printed specimen, Specimen 5, in accordance with the present invention.
FIG. 31E is a continuation from FIG. 31A and represents a portion of an example of a printed specimen, Specimen 5, in accordance with the present invention.
FIG. 31F is a continuation from FIG. 31A and represents a portion of an example of a printed specimen, Specimen 5, in accordance with the present invention.
FIG. 31G is a continuation from FIG. 31A and represents a portion of an example of a printed specimen, Specimen 5, in accordance with the present invention.
FIG. 31H is a continuation from FIG. 31A and represents a portion of an example of a printed specimen, Specimen 5, in accordance with the present invention.
FIG. 31I is a continuation from FIG. 31A and represents a portion of an example of a printed specimen, Specimen 5, in accordance with the present invention.
FIG. 31J is a continuation from FIG. 31A and represents a portion of an example of a printed specimen, Specimen 5, in accordance with the present invention.
FIG. 32A, which continues through FIG. 32L, represents a portion of an example of a printed specimen, Specimen 6, in accordance with the present invention.
FIG. 32B is a continuation from FIG. 32A and represents a portion of an example of a printed specimen, Specimen 6, in accordance with the present invention.
FIG. 32C is a continuation from FIG. 32A and represents a portion of an example of a printed specimen, Specimen 6, in accordance with the present invention.
FIG. 32D is a continuation from FIG. 32A and represents a portion of an example of a printed specimen, Specimen 6, in accordance with the present invention.
FIG. 32E is a continuation from FIG. 32A and represents a portion of an example of a printed specimen, Specimen 6, in accordance with the present invention.
FIG. 32F is a continuation from FIG. 32A and represents a portion of an example of a printed specimen, Specimen 6, in accordance with the present invention.
FIG. 32G is a continuation from FIG. 32A and represents a portion of an example of a printed specimen, Specimen 6, in accordance with the present invention.
FIG. 32H is a continuation from FIG. 32A and represents a portion of an example of a printed specimen, Specimen 6, in accordance with the present invention.
FIG. 32I is a continuation from FIG. 32A and represents a portion of an example of a printed specimen, Specimen 6, in accordance with the present invention.
FIG. 32J is a continuation from FIG. 32A and represents a portion of an example of a printed specimen, Specimen 6, in accordance with the present invention.
FIG. 32K is a continuation from FIG. 32A and represents a portion of an example of a printed specimen, Specimen 6, in accordance with the present invention.
FIG. 32L is a continuation from FIG. 32A and represents a portion of an example of a printed specimen, Specimen 6, in accordance with the present invention.
FIG. 33A, which continues through FIG. 33L, represents a portion of an example of a printed specimen, Specimen 7, in accordance with the present invention.
FIG. 33B is a continuation from FIG. 33A and represents a portion of an example of a printed specimen, Specimen 7, in accordance with the present invention.
FIG. 33C is a continuation from FIG. 33A and represents a portion of an example of a printed specimen, Specimen 7, in accordance with the present invention.
FIG. 33D is a continuation from FIG. 33A and represents a portion of an example of a printed specimen, Specimen 7, in accordance with the present invention.
FIG. 33E is a continuation from FIG. 33A and represents a portion of an example of a printed specimen, Specimen 7, in accordance with the present invention.
FIG. 33F is a continuation from FIG. 33A and represents a portion of an example of a printed specimen, Specimen 7, in accordance with the present invention.
FIG. 33G is a continuation from FIG. 33A and represents a portion of an example of a printed specimen, Specimen 7, in accordance with the present invention.
FIG. 33H is a continuation from FIG. 33A and represents a portion of an example of a printed specimen, Specimen 7, in accordance with the present invention.
FIG. 33I is a continuation from FIG. 33A and represents a portion of an example of a printed specimen, Specimen 7, in accordance with the present invention.
FIG. 33J is a continuation from FIG. 33A and represents a portion of an example of a printed specimen, Specimen 7, in accordance with the present invention.
FIG. 33K is a continuation from FIG. 33A and represents a portion of an example of a printed specimen, Specimen 7, in accordance with the present invention.
FIG. 33L is a continuation from FIG. 33A and represents a portion of an example of a printed specimen, Specimen 7, in accordance with the present invention.
FIG. 34A, which continues through FIG. 34B, represents a portion of an example of an application for life insurance, Specimen 8, in accordance with the present invention.
FIG. 34B is a continuation from FIG. 34A and represents a portion of an example of an application for life insurance, Specimen 8, in accordance with the present invention.
FIG. 35A, which continues through FIG. 35C, represents a portion of an example of a residential loan application, Specimen 9, in accordance with the present invention.
FIG. 35B is a continuation from FIG. 35A and represents a portion of an example of an application for life insurance, Specimen 9, in accordance with the present invention.
FIG. 35C is a continuation from FIG. 35A and represents a portion of an example of an application for life insurance, Specimen 9, in accordance with the present invention.
B. User Screens
User Screens 1-22 provide a representative group of screens shown on a monitor or other output device and produced by means of the computer system of the present invention. The User Screens can be seen by the system users as they prepare or update illustrations.
C. Variables, Identities, and Formulas
Variables, identities, and formulas which can be used throughout the illustration system are provided subsequently herein.
D. Specimens
Specimens 1-9 provide examples of printed product illustrations, a life insurance application form, and a mortgage application form which can be created by the present invention. The printed illustrations also include prepared textual information explaining the use of life insurance as collateral for a mortgage, life insurance policy information, mortgage information, and a comparison of these and other forms of financing.
Specimens 2-7 show an illustration of an investment, here exemplified as a life insurance policy, used as at least a partial replacement for a down payment, when contrasted with a conventional mortgage. (An illustration is a printed or visual representation of estimated values which permits a customer for or seller of a financial product to understand how that product will perform given a specified set of assumptions.) This investment/collateral/mortgage repayment means is owned by the home buyer.
The following description, given by way of example and not intended to limit the present invention solely to the described embodiments, will be best understood in conjunction with the accompanying drawings, computer or xe2x80x9cuserxe2x80x9d screens, variables, and specimens incorporated herein.
A. Figures
FIG. 36 represents a schematic flow chart of logic behind a xe2x80x9cmain menuxe2x80x9d (or user screen with a list of the functional choices that the computerized system provides to users) of the present invention.
FIG. 37A depicts logic behind an illustration function of the present invention, as continued in FIGS. 37B-1-37F-1.
FIG. 37B-1 is a portion of FIG. 37 that provides a flow chart of logic used in calculating and printing an individualized or xe2x80x9cnewxe2x80x9d prospective applicant illustration tailored to the individual, and in creating a corresponding new prospective applicant data file, in accordance with the present invention.
FIG. 37B-2 is a portion of FIG. 37 that provides a flow chart of logic used in calculating and printing an individualized or xe2x80x9cnewxe2x80x9d prospective applicant illustration tailored to the individual, and in creating a corresponding new prospective applicant data file, in accordance with the present invention.
FIG. 37B-3 is a portion of FIG. 37 that provides a flow chart of logic used in calculating and printing an individualized or xe2x80x9cnewxe2x80x9d prospective applicant illustration tailored to the individual, and in creating a corresponding new prospective applicant data file, in accordance with the present invention.
FIG. 37B-4 is a portion of FIG. 37 that provides a flow chart of logic used in calculating and printing an individualized or xe2x80x9cnewxe2x80x9d prospective applicant illustration tailored to the individual, and in creating a corresponding new prospective applicant data file, in accordance with the present invention.
FIG. 37B-5 is a portion of FIG. 37 that provides a flow chart of logic used in calculating and printing an individualized or xe2x80x9cnewxe2x80x9d prospective applicant illustration tailored to the individual, and in creating a corresponding new prospective applicant data file, in accordance with the present invention.
FIG. 37B-6 is a portion of FIG. 37 that provides a flow chart of logic used in calculating and printing an individualized or xe2x80x9cnewxe2x80x9d prospective applicant illustration tailored to the individual, and in creating a corresponding new prospective applicant data file, in accordance with the present invention.
FIG. 37B-7 is a portion of FIG. 37 that provides a flow chart of logic used in calculating and printing an individualized or xe2x80x9cnewxe2x80x9d prospective applicant illustration tailored to the individual, and in creating a corresponding new prospective applicant data file, in accordance with the present invention.
FIG. 37B-8 is a portion of FIG. 37 that provides a flow chart of logic used in calculating and printing an individualized or xe2x80x9cnewxe2x80x9d prospective applicant illustration tailored to the individual, and in creating a corresponding new prospective applicant data file, in accordance with the present invention.
FIG. 37B-9 is a portion of FIG. 37 that provides a flow chart of logic used in calculating and printing an individualized or xe2x80x9cnewxe2x80x9d prospective applicant illustration tailored to the individual, and in creating a corresponding new prospective applicant data file, in accordance with the present invention.
FIG. 37C-1 provides a flow chart of logic used in changing or updating an existing client data file for the purpose of providing the prospective applicant new illustrations based on assumptions which differ from those originally illustrated, in accordance with the present invention.
FIG. 37D-1 represents a flow chart of logic used in electronically completing and/or printing a life insurance application form and storing the information contained on the insurance application form in a database of the host computer for later retrieval, in accordance with the present invention.
FIG. 37E-1 represents a flow chart of logic used to access the host computer for, and/or print out information regarding, new insurance product developments.
FIG. 37F-1 represents a flow chart of logic used in interpolating to find target universal life insurance illustration values.
FIG. 38A, which is continued to FIG. 38B, is a schematic representation of relationships between various data entities (database tables) within the database system of the present invention.
FIG. 38B is a continuation from FIG. 38A of the schematic representation of relationships between various data entities (database tables) within the database system of the present invention.
FIG. 39 represents a User Screen shown on a monitor or other output device and produced by means of the computer system of the present invention, to be seen by the system users as they prepare or update illustrations.
FIG. 40 represents a User Screen shown on a monitor or other output device and produced by means of the computer system of the present invention, to be seen by the system users as they prepare or update illustrations.
FIG. 41 represents a User Screen shown on a monitor or other output device and produced by means of the computer system of the present invention, to be seen by the system users as they prepare or update illustrations.
FIG. 42 represents a User Screen shown on a monitor or other output device and produced by means of the computer system of the present invention, to be seen by the system users as they prepare or update illustrations.
FIG. 43 represents a User Screen shown on a monitor or other output device and produced by means of the computer system of the present invention, to be seen by the system users as they prepare or update illustrations.
FIG. 44 represents a User Screen shown on a monitor or other output device and produced by means of the computer system of the present invention, to be seen by the system users as they prepare or update illustrations.
FIG. 45 represents a User Screen shown on a monitor or other output device and produced by means of the computer system of the present invention, to be seen by the system users as they prepare or update illustrations.
FIG. 46 represents a User Screen shown on a monitor or other output device and produced by means of the computer system of the present invention, to be seen by the system users as they prepare or update illustrations.
FIG. 47 represents a User Screen shown on a monitor or other output device and produced by means of the computer system of the present invention, to be seen by the system users as they prepare or update illustrations.
FIG. 48 represents a User Screen shown on a monitor or other output device and produced by means of the computer system of the present invention, to be seen by the system users as they prepare or update illustrations.
FIG. 49 represents a User Screen shown on a monitor or other output device and produced by means of the computer system of the present invention, to be seen by the system users as they prepare or update illustrations.
FIG. 50 represents a User Screen shown on a monitor or other output device and produced by means of the computer system of the present invention, to be seen by the system users as they prepare or update illustrations.
FIG. 51 represents a User Screen shown on a monitor or other output device and produced by means of the computer system of the present invention, to be seen by the system users as they prepare or update illustrations.
FIG. 52 represents a User Screen shown on a monitor or other output device and produced by means of the computer system of the present invention, to be seen by the system users as they prepare or update illustrations.
FIG. 53 represents a User Screen shown on a monitor or other output device and produced by means of the computer system of the present invention, to be seen by the system users as they prepare or update illustrations.
FIG. 54 represents a User Screen shown on a monitor or other output device and produced by means of the computer system of the present invention, to be seen by the system users as they prepare or update illustrations.
FIG. 55 represents a User Screen shown on a monitor or other output device and produced by means of the computer system of the present invention, to be seen by the system users as they prepare or update illustrations.
FIG. 56 represents a User Screen shown on a monitor or other output device and produced by means of the computer system of the present invention, to be seen by the system users as they prepare or update illustrations.
FIG. 57 represents a User Screen shown on a monitor or other output device and produced by means of the computer system of the present invention, to be seen by the system users as they prepare or update illustrations.
FIG. 58 represents a User Screen shown on a monitor or other output device and produced by means of the computer system of the present invention, to be seen by the system users as they prepare or update illustrations.
FIG. 59 represents a User Screen shown on a monitor or other output device and produced by means of the computer system of the present invention, to be seen by the system users as they prepare or update illustrations.
FIG. 60 represents a User Screen shown on a monitor or other output device and produced by means of the computer system of the present invention, to be seen by the system users as they prepare or update illustrations.
FIG. 61A, which continues through FIG. 61E, represents a portion of an example of a printed product illustration prepared in accordance with the present invention.
FIG. 61B, represents a portion of an example of a printed product illustration prepared in accordance with the present invention.
FIG. 61C, represents a portion of an example of a printed product illustration prepared in accordance with the present invention.
FIG. 61D, represents a portion of an example of a printed product illustration prepared in accordance with the present invention.
FIG. 61E, represents a portion of an example of a printed product illustration prepared in accordance with the present invention.
FIG. 62 represents an example of a printed product illustration prepared in accordance with the present invention.
FIG. 63A, which continues through FIG. 63B, represents an example of a printed life insurance application form prepared in accordance with the present invention.
FIG. 63B, which continues FIG. 63A, represents an example of a printed life insurance application form prepared in accordance with the present invention.
B. User Screens
User Screens 23-42 provide a representative group of screens shown on a monitor or other output device and produced by means of the computer system of the present invention. The User Screens can be seen by the system users as they prepare or update illustrations.
C. Variables, Identities, and Formulas
Variables, identities, and formulas which can be used throughout the illustration system are provided subsequently herein.
It should be kept in mind that such variables, identities, and formulas are not the present inventionxe2x80x94rather, they are convenient ways of characterizing the electrical signal modification being accomplished by the digital electrical signal processing system of the present invention, as defined in the claims herein.
D. Specimens
The specimens provide examples of printed product illustrations, and a life insurance application form. It should also be kept in mind that the present invention, as defined in the claims, is not merely a printed publication or a businessxe2x80x94rather, the claimed invention is a tool having utility in commercial, scholarly, and other applications.